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Explain why the demand for labor and other factors of production is a derived demand.
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The derived nature of resource demand implies that the strength of the demand for a factor such as labor will depend on what two things?
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As the units of labor increase, the total product increases but the marginal product of labor decreases. What law is responsible for this?
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What is the marginal revenue product?
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State the Marginal Productivity Theory of resource demand.
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Define marginal resource cost.
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State the rule for employing factor resources.
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What is the MRC equal to under the assumption that the labor market is perfectly competitive?
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State the complete rule for profit maximization under perfect competition.
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Why does the MR.P schedule constitute the firm’s demand for labor?
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Illustrate the backward-bending curve.
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Explain the income effect.
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Explain the substitution effect.
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How does immigration affect wages? Why?
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What happens to wages at the level of employment under monopsony relative to a perfectly competitive labor market? Why?
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Illustrate a typical equilibrium in a unionized labor market. Are wages high or low? What about employment?
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What other factors may account for wage differentials among people in different occupations.
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What do compensating differentials measure?
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What does human capital refer to?
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Name three immobilities that are sources of wage differentials.
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What are non-competing groups and how do they affect wages?
